Raw sugar futures on ICE inched up on limited short-covering after touching an almost three-year low on Thursday, as expectations of ample global supplies weighed on prices, dealers said. ICE cocoa climbed to a four-month high, while arabica futures edged down, hovering close to a near three-year low.
Spot May raw sugar futures on ICE Futures US inched up 0.01 cent, or 0.06 percent, to finish at 17.41 cents a lb, after falling to 17.25 cents, the lowest level for the benchmark front-month contract since July 2010. Open interest in May totalled 61,954 lots on Wednesday. The most-active July contract settled up 0.01 cent, or 0.06 percent, at 17.38 cents a lb, also touching a low of 17.25 cents a lb.
A dip to the intraday low prompted limited short-covering, which buoyed prices by the end of the session, dealers said. Raw sugar prices have fallen more than 50 percent since peaking at 36.08 cents in February 2011, driven down by successive seasons of supply outstripping demand.
Prices now have limited technical support in the 17 to 17.25-cent range after trading in a tight range throughout the month, dealers said. “We set new contract lows and broke out of our April range, which brought in technical selling. We’re trying to get above the previous low, but we’re still under pressure,” said Michael McDougall, vice president at Newedge in New York.
Recent efforts by the Brazilian government to support its struggling ethanol industry were seen as some support for sugar prices, as a greater diversion of cane into ethanol stands to reduce a steep global sweetener surplus. But the effects of those efforts remains to be seen and have not outweighed technical bearishness in the market, dealers have said.
August white sugar on Liffe fell by $0.90, or 0.2 percent, to finish at $498.60 a tonne. July cocoa on ICE settled up $34, or 1.5 percent at $2,360 a tonne, after touching $2,365 a tonne, the highest price since late December. Prices reached a high of $2,373 after the settlement.
The second-month contract has risen more than 16 percent since touching a low of $2,034 in early March, surging past levels of technical resistance. A strong technical chart may also be encouraging investors to buy, said James Cordier, principal and founder of Optionsellers.com, on Thursday. July cocoa on Liffe rose 5 pounds, or 0.3 percent, to finish at 1,555 pound a tonne with gains capped by the rise in sterling to a two-month high against the dollar.
July arabica coffee on ICE futures dropped 1 cent, or 0.7 percent, to close at $1.3740 per lb. The contract touched $1.3355 on April 15, the lowest level for the second-month contract since May 2010. July robusta coffee futures on Liffe settled down $7, or 0.4 percent, at $1,984 a tonne. Vietnam’s coffee exports this month are estimated to have fallen 34.6 percent from a year ago to 110,000 tonnes, or 1.83 million bags, the government’s statistics office said.
